There are many tough decisions that need to be made when a relationship irretrievably breaks down. These invariably concern you, your family, your home, and your finances. A decision should also be made on how to fund the legal proceedings One of the first financial considerations many must make is deciding how to fund the divorce. This can be extremely problematic in some cases, especially, in cases where one spouse controls all or most of the family wealth.
Whilst public funding is no longer available in Family law matters (except in domestic abuse cases), there are a variety of alternative options available to ensure legal fees are met, allowing you to engage in divorce proceedings.
Your own resources
You may have income or savings of your own which can help pay for legal fees as and when they are incurred. This form of payment may be non-viable, as drawing money from investments may incur penalty charges for liquidating without sufficient notice, however, the penalty may be cheaper than borrowing money.
Legal Expense Insurance
Some insurance companies will offer legal expense insurance when you buy home or motor insurance, which can help fund or cover the costs of your legal fees, depending on the area of law, and how much you are covered for.
You can also buy legal expenses insurance on its own specifically for family law matters, without it being a bolt-on to another insurance policy.
Obtaining a loan from your bank or another commercial lender may need to be considered to privately fund legal fees. Some banks will fund your costs if you undertake to repay them out of your financial settlement. Banks may also agree to ‘roll up’ the interest payments into the final payment. Therefore, repayment shall not be due until the case concludes.
Litigation loans for divorce matters are offered by specialist providers. Audley Chaucer can introduce you to a number of such providers. The aim of such providers is to provide a loan facility to help pay the legal costs of individuals going through a divorce. The loan is used solely to pay legal costs and disbursements. This type of loan does differ to commercial loans as the funds are paid directly to the solicitors firm to fund your case. The final loan balance will usually be paid off directly by your solicitor once you receive your financial settlement at the end of the case.
Sears Tooth Agreement
A Sears Tooth Agreement is an agreement entered into between yourself and your solicitor, whereby legal fees are paid to the solicitor upon settlement of the case, before the remaining funds are transferred to you. It is likely that interest shall also be payable on the debt accrued. We at Audley Chaucer will consider entering into such an agreement with you.
Legal Services Payment Order
In some circumstances, the Court may grant a Legal Services Payment Order (‘LSPO’) meaning your spouse must fund your legal fees, either through monthly instalments or a lump sum payment. There are strict requirements that must be satisfied in order for a court to grant a LSPO, the most prominent being that you have no other source of funds available to you to pay your own legal fees.